HFZ Faces Foreclosure Suit At Another Chelsea Property
Embattled developer HFZ Capital is at risk of losing yet another property near the High Line to foreclosure.
HFZ owes nearly $15M to lender Malvern Bank on a mortgage backed by two retail condominiums at 505 West 19th St., according to a lawsuit filed Thursday with the New York County Supreme Court.
HFZ’s monthly payments on the building were deferred for most of 2020 and due to resume in January 2021, according to the complaint filed by Malvern. But HFZ failed to start repayments at all, the suit alleges.
The mortgage loan was due to mature in 2027, according to the 2017 loan agreement cited in the suit, but HFZ's failure to pay triggered a clause in the agreement that allowed Malvern to immediately request full repayment and seize control of the property, according to the suit.
HFZ didn't respond to Bisnow's request for comment.
Foreclosure on 505 West 19th St. is the latest in a string of woes for HFZ, which has become a magnet for weighty accusations in recent years: Malvern Bank is the second party in three months to pursue legal action against HFZ for its High Line condo development.
Investment vehicle Tiger Ref Highline, an LLC belonging to investment firm Stelac Advisory Services, bought a 55% interest in HFZ LLC in 2012, Crain’s New York Business reported at the time, which gave Tiger an indirect ownership stake in 501 West 19th St. In April, Tiger accused HFZ of fraud in a lawsuit, alleging that the developer owed at least $10.4M.
Within the past year, lenders also foreclosed on HFZ’s twin High Line condo towers known as The XI.
HFZ ran out of capital for the buildings at 76 11th Ave., leading to a $900M sale of the development to Access Industries and the Witkoff Group. A lender for The XI, Children’s Investment Fund, took HFZ to court for $160M for failing to pay its debt on the project last January.
GCE Belnord, an investor in The XI, also alleged HFZ owed it $10M in a lawsuit filed in February last year and had failed to distribute it. And in yet another lawsuit, Prestige Capital Finance sued HFZ for $8.5M, accusing HFZ of not paying for work completed on The XI’s window and facade systems.
Sales began this week at the 76 11th Ave. properties, which have been rebranded to One High Line, Bloomberg reported. Move-ins are scheduled for next summer — years later than HFZ initially planned.
Accusations of HFZ’s bad behavior aren’t limited to Chelsea. In December last year, the board of the Chatsworth co-op building owned by HFZ accused the company, founded by Ziel Feldman, of leaving the property in “dire financial straits,” The Real Deal reported at the time.
A lawsuit from the co-op board accused then-HFZ executive Nir Meir of charging personal expenses — including $10K weekly sushi dinner parties — to HFZ and failing to invest in the construction of 340-344 West 72nd St., leaving the Upper West Side property incomplete.
A New York court also determined that Meir was personally liable for a $19M repayment to an investor on a failed Upper East Side project in 2021. When more than a year passed without any payments, the judge said Meir was trying to manipulate the justice system and signed off on the seizure of $12.6M of Meir’s wife’s assets, The Real Deal previously reported.
